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Anticipating ROI, Rewe Expands Its RFID Deployment

One of Europe's largest food retailers, the company is moving beyond the pilot phase so it can receive 3,000 tagged pallets per day.
By Rhea Wessel
Mar 01, 2007German retailer Rewe has moved out of a major testing phase and into day-to-day operations with RFID-tagged pallets at its distribution center in Norderstedt, in northern Germany. Europe's third-largest food merchant is now focused on expanding the RFID application at its DC so it can receive 3,000 tagged pallets per day. Presently, it receives a total of 200 to 300 tagged pallets daily from roughly 20 different suppliers.

Rewe's RFID project began in earnest in 2005, though management had discussed it internally as early as 2003. The Norderstedt pilot ran from February to October 2006 with the help of consulting company Kurt Salmon. The companies used the results to calculate a cost-benefit analysis showing Rewe could achieve a return on its investment within two years of going operational.

An RFID receiving portal at Rewe's distribution center.

For the pilot, Rewe constructed six RFID receiving portals, fitted two forklifts with RFID interrogators and tested several handheld readers on 1,500 pallets, to which it attached EPC Class 1 Gen 2 passive UHF tags operating at 868 MHz. By May of this year, the firm intends to expand the application to having 60 RFID receiving portals and 16 RFID-enabled forklifts in operation. The company is also testing about 30 handheld readers. In addition, Rewe has tagged 500 warehouse storage bays so far and is increasing this number to 10,000.

Rewe declines to disclose the identities of the reader manufacturers it used during the pilot, and notes that it is still narrowing its selection of vendors for its planned expansion. The retailer plans to decide on a single vendor to simplify its RFID application by enabling easier software updates on all interrogators, says Jörg Sandlöhken, who works in the company's internal consulting and risk-management unit.

Rewe worked with its suppliers to link the information on each pallet's tag with the product records in its IT system, such as product descriptions, the number of boxes on each pallet and receiving orders. Rewe will continue to use EPC Class 1 Gen 2 UHF tags. The system allows the company to exchange order documentation with its suppliers electronically, says Sandlöhken—everything from receiving shipments to the final invoice.

When goods arrive at the distribution center, the driver delivering them unloads the tagged pallets, which are read by a portal interrogator. The information linked to the goods is compared with Rewe's receiving records, and once a match is made, receipt of the goods is recorded in Rewe's system.

"Everything happens electronically, "Sandlöhken notes, "when the goods are unloaded."

Sandlöhken says the pilot showed him that read rates and the technology behind RFID with EPC Class 1 Gen 2 are not the most difficult parts of an application. Rather, the challenge is to integrate everything into existing IT systems so data on dispatch statements can be compared to the information collected by RFID.

"It's a matter of how you deal with the data," he says.

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